Chapter IV: The Traditional Seasonal Analysis of Price Trends can still yield valuable predictive information. |
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| A non-typical Seasonal Pattern is shown by MicroSoft. The more usual seasonal pattern has the low prices during the pre-winter months. The percentage spread between the high and low months is 8.76 percent, when averaged over the last 23 years. For this chart, price plots for each year are traced on top of each other. Each month's value is adjusted to the mean price for the particular year. The orange line represents the average monthy price expressed as a portion of the annual price. |
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| MSFT speculators might well avoid the month of July. Here, the profitability of the month is defined as the percentage change between the mean price on the first day of the month and the mean price on the last day of the month. So the figures displayed here refer to the average change during each month, rather than changes between months. By this measure, the month of January appears favorable, offering a quick return averaging 7.15 percent. |
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| The 'Monthly Profitability' discussed above applies to holdings during the course of a single month. Another, perhaps more realistic evaluation is the one charted here. Here the value evaluated is the highest price reached at anytime during the next quarter. MicroSoft speculators who have taken positions starting in September gain 20.26 percent, judged by the maximum price attained during the next three months. |
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This plot of the average monthly price as a proportion of the average yearly price removes the year-to-year secular trend. However the within-year trend is still intact, so it is expected that the December value might be higher than the January average, for a healthy company. Over the span of 7 months from May to December a gain of 8.76 percent has occurred historically. This is an annual rate of 15.0 percent. Investing 'against the tide' of the seasonal trend can cost an annualized 21.02 percent. Before making any decisions based on the standard 12 Month Seasonal Calendar, be sure to check the characteristics of the 24 Month Political Election Calendar. Research shows that many characteristics of the traditional seasonal averages are actually induced by events in the 24 month political cycle, so the characteristics of even versus odd numbered years may be quite distinct. |
Much Deeper Market Timing Analysis with MSFT roadmap and Summary of most effective indicators: |
| Wednesday, July 01, 2009: We have news on Public Service Enterprise Group Inc., ticker symbol PEG. Signs of an over-bought condition have become noticable. Also, there are breaking events concerning The Travelers Companies, Inc. and Kellogg Company. From the News Archive: (7/1/2009 ) Favorable events happened at Allegheny Energy, Inc., Bank of America Corporation, and American International Group, Inc.. Meanwhile, bad news came from Lexmark International, Inc.. |